International Biotechnology Trust’s (IBT) has reported interim results, to 29 February 2020. The pandemic’s sustained impact on financials markets began in March, so the impact on IBT’s portfolio over this results period, was negligible.
Over the interim period, the company’s NAV per share returned 3.6%. By comparison, the NASDAQ biotechnology index (NBI) returned 6.0% and the FTSE all-share index returned (5.5%). Over the same period, IBT’s shares returned (13.4%).
Quoted and unquoted
The quoted portfolio returned 4.5% for the six months ended 29 February 2020 (gross of management and performance fees). During the period under review, the quoted portfolio has slightly underperformed the NBI due to a few investments that did not perform well.
IBT continues to enjoy success through its access to an unquoted element of the biotechnology and healthcare sectors. SV Life Sciences Fund VI’s (SV Fund VI) average investment has a currency-adjusted internal rate of return (IRR) of 18.1% per annum, since inception of the fund. During the six months ended 29 February 2020, SV Fund VI made three distributions to the company after successfully exiting investments and thus crystallising some of these impressive gains.
IBT notes: “Our investment in SV Fund VI will continue to increase slowly towards the $30.0m commitment, of which we have now invested 71.3%. We expect the increasing investment to overlap with both the exits of our existing unquoted companies and the distributions received from SV Fund VI. The Board expects the unquoted portfolio (including both SV Fund VI and directly-held unquoted investments) to remain within our guideline range of 5-15% of total investments.
Our directly-held unquoted portfolio continues to yield positive results, with a fair value gain of 14.4% (gross of management and performance fees) during the six months ended 29 February 2020 which was driven predominantly by unrealised gains, providing stability to the Company’s performance during this period of volatility in the market.”
QuotedData caught up with SV Health Investors last week
Last week, QuotedData had the chance to catch-up with SV Health Investors, the managers of IBT’s unquoted investments – you can access our write-up here.
Biotech fundamentals remain intact
John Aston, chairman of IBT, said the following in his outlook statement: “Notwithstanding the extreme volatility in the financial markets, we continue to believe that the biotechnology sector’s long-term prospects are not diminished, since the need to treat patients is not related to stock market sentiment.
Since the low point in mid March 2020, the company’s share price has now recovered and is now close to 1% of the preceding 12-month high.
We continue to believe that the biotechnology sector has strong fundamentals and good growth prospects, with the potential to create value for investors. Persons over the age of 65 comprise the fastest growing age group in the US, with this segment of the population expected to double between now and 2050. The growing elderly population accounts for over half of US health spend, securing future demand and innovation in the biotechnology sector.
The manager is well equipped to work remotely and therefore the current restrictions associated with covid-19 have not radically changed the working practices for the company. However, the investment landscape has been affected. The manager anticipated the likely global impact of the virus relatively early in its trajectory and made appropriate adjustments to the portfolio. I expect that there will be more volatility to come as shareholder sentiment is affected by the progress of the pandemic, but the fundamentals of the biotech sector remain intact, and should deliver growth over the long-term.”
IBT: International Biotechnology Trust says sector’s long-term fundamentals remain undiminished